Henry Aubin: Cities must handle climate change

Henry Aubin, The Gazette11.26.2012

Henry Aubin

One of the Union des municipalités du Québec's green ideas is to impose development fees on new construction: If a new residential project in a cornfield requires roads, sewers and other infrastructure, the developer pays for them, passing on the cost to homebuyers.Frederic Hore
/ The Gazette

MONTREAL — I generally pay little attention when municipalities go to the Quebec government to plead, beg and grovel for new taxing powers. They’ve been doing this routine for decades and obtained little that’s worthwhile.

But this time could be different.

The minister for municipal affairs, Sylvain Gaudreault, has responded with tentative warmth to a pitch by the Union des municipalités du Québec to tap new sources of revenue. (The UMQ represents 300 towns and cities; Montreal will join it in January.) The minister says he’s “looking at several different scenarios” for new municipal taxes.

This news will anger many people, and for several reasons. First, according the Fraser Institute’s calculation, Quebecers already pay more taxes as a percentage of GDP than all other North Americans when federal, provincial and local taxes are combined.

Second, a significant part of some municipalities’ taxes pay for corruption and collusion. In the case of Montreal, a chairman of the executive committee during the Bourque administration, Jean Fortier, estimates that on the basis of testimony before the Charbonneau Commission, this wasted money could total slightly more than $1 billion over the course of the 2000-2009 period. Taxpayers might argue that permanently stopping this waste would give the city all the money it needs without raising taxes.

Third, Quebec municipal workers’ salaries and benefits are worth about 30 per cent more than those of provincial workers with the same responsibilities. Ending this mega-disparity, the argument goes, would obviate new taxes.

Alas, things aren’t so simple. Fortier’s estimated cost of graft accounts for roughly three per cent of Montreal’s total spending. And, even if public officials were to have the courage to confront municipal workers’ unions, they wouldn’t be able to chop remuneration by 30 per cent in one blow; realism says they’d have to pare it gradually, and that could take quite a few years.

Meanwhile, as the UMQ white paper notes, many of the province’s cities face ever more costly and imposing challenges. Globalization, for example, will mean cities need to make themselves more internationally competitive — hence more investments in infrastructure and quality-of-life matters so as to attract and retain a mobile workforce.

Also, demographic changes will mean providing for more elderly people and stepping up efforts at managing the diversity that comes with immigration.

Climate change will mean municipalities must spend more not only to mop up after crises (as New York is spending this month) but also to invest beforehand in emergency preparedness against ice storms, flooded waterways, rising sea levels, etc.

The point: Even if municipal officials and contractors were suddenly to turn saintly, and even if municipal workers were to accept income loss, municipalities would soon still face rising costs. The question is not whether taxes should rise but how.

Relying increasingly on property taxes (which make up about 70 per cent of many municipalities’ revenue) is, of course, out. Taxing people on the basis of where they live discriminates against those on fixed income, among others: As the value of their homes rise, their taxes go up even if their ability to pay does not.

The UMQ argues that new fiscal measures should be green. A gas tax, for example, would have the effect of encouraging less use of cars and more use of public transit, thus reducing greenhouse gases. (Note that the annual $45 fee on cars registered on Montreal Island, which the Tremblay administration imposed last year, with proceeds going to public transit, does not reduce driving: Motorists pay the same amount regardless of whether they drive the car 200 kilometres or 20,000.)

Another of the UMQ’s green ideas, which Peter Trent also pitched in his new book The Merger Delusion, is to impose development fees on new construction: If a new residential project in a cornfield requires roads, sewers and other infrastructure, the developer pays for them, passing on the cost to homebuyers. (The norm today is for the town’s or Quebec’s general taxpayers to pay). This technique would raise the cost of property in the countryside and thus slow energy-intensive urban sprawl.

Municipalities have legitimate new expenses, and cutting the costs of corruption and labour won’t pay for all of them. If we must have greater taxes or fees, let’s at least design them so that the method of imposing them addresses the colossal problem of climate change.

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